Ibovespa Drops From Three-Week High as Rate Outlook Sinks Ambev

The Ibovespa retreated from a three-week high as traders increased bets on higher borrowing costs in Brazil, pushing consumer stocks lower.

Consumer-health products manufacturer Hypermarcas SA (HYPE3) and brewer Ambev SA (ABEV3) led losses by companies that sell in the local market. The MSCI Brazil/Consumer Staples Index fell toward a two-year low. Usinas Siderurgicas de Minas Gerais SA, the steelmaker known as Usiminas, followed metals higher.

The Ibovespa sank 0.3 percent to 48,333.88 at 11:01 a.m. in Sao Paulo, with 28 stocks rising and 43 dropping. The real depreciated 0.4 percent to 2.4103 per U.S. dollar. Swap rates climbed on speculation a weaker currency will fuel inflation.

“Swap rates are pricing in the concern that, in the long run, inflation will remain far from the government’s target,” Gustavo Mendonca, an economist at Saga Capital, said in a phone interview from Rio de Janeiro. “The outlook for the Ibovespa doesn’t look very promising.”

Brazilian soybean and corn growers will reap less than previously forecast as heat and drought harm crops in several parts of the country, a report from the government agency known as Conab showed yesterday.

Ambev fell 1.3 percent to 16.39 reais. Hypermarcas lost 1.6 percent to 15.45 reais. Usiminas added 0.5 percent to 11.91 reais as the Bloomberg Base Metals 3-Month Price Commodity Index rose 0.8 percent.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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